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UNANTICIPATED MONEY GROWTH AND OUTPUT FLUCTUATIONS
Author(s) -
SHEFFRIN STEVEN M.
Publication year - 1979
Publication title -
economic inquiry
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.823
H-Index - 72
eISSN - 1465-7295
pISSN - 0095-2583
DOI - 10.1111/j.1465-7295.1979.tb00292.x
Subject(s) - economics , aggregate demand , inflation (cosmology) , business cycle , rational expectations , monetary economics , persistence (discontinuity) , aggregate (composite) , econometrics , monetary policy , keynesian economics , microeconomics , physics , materials science , geotechnical engineering , theoretical physics , composite material , engineering
A rational expectations model is developed in which prices are fixed during a period. The implications of this model are that output fluctuations are correlated with unanticipated aggregate demand but not with unanticipated inflation. Empirical tests of the model indicate that the persistence of business cycles cannot be explained solely by unanticipated aggregate demand .